FCA and BoE set vision for tokenised wholesale markets

What does this mean?

Builidng a UK roadmap for tokenised wholesale markets

The FCA and BoE set out a coordinated approach to tokenised wholesale market infrastructure. The paper recognises that activity has often focused on early-stage experiments, and that greater clarity is needed to support scaled adoption.

The authorities set out a medium-term vision in which tokenised securities, cash and collateral move more efficiently across issuance, trading, clearing, settlement and post-trade processes. Tokenised and non-tokenised infrastructure are expected to coexist, supported by common rules, standards and interoperability.

The paper also makes clear that regulation is unlikely to materially change where risks remain equivalent. The authorities intend to remain technology-neutral, with regulatory treatment driven by the activity, legal rights and risks, rather than the specific ledger technology used.

Maintaining accountability and market standards

The authorities are clear that there must continue to be an identifiable, accountable person standing behind regulated financial services activities. This applies across issuance, trading, settlement, custody and record-keeping. Regulated firms may use public or private distributed ledger technology (DLT) networks, smart contracts and decentralised finance (DeFi) solutions, but only where they can maintain regulatory standards. Firms will need to demonstrate appropriate controls for operational resilience, cybersecurity, market integrity, anti-money laundering (AML), sanctions, settlement finality and client protection.

For securities within scope of UK Central Securities Depositories Regulation (UK CSDR), settlement should continue through a central securities depository (CSD) or, where on-chain settlement is used, through a Digital Securities Depository (DSD). For securities outside UK CSDR, including private shares and most fund units, the authorities still expect an identifiable entity to maintain standards and accurate ownership records.

Clarifying prudential treatment

The PRA confirms that tokenised traditional assets should generally receive the same prudential treatment as their non-tokenised equivalents where legal rights are identical and underlying risks are comparable. This may apply to digital issuances within the Digital Securities Sandbox (DSS), including the UK Government’s Digital Gilt Instrument (DIGIT) pilot, provided the underlying risks are comparable.

The PRA continues to expect conservative treatment for unbacked cryptoassets, including a 100% capital requirement under the market risk framework. It also recognises that some cryptoasset exposures may justify more risk-sensitive treatment where existing rules allow discretion. Firms are also encouraged to use the BCBS standard as a reference point.

The current position remains interim. The PRA expects to consult on its proposed future prudential framework following completion of the BCBS targeted review, with consultation expected in 2028 at the earliest.

Supporting settlment, collateral and DIGIT

The BoE intends to deliver a synchronisation service by 2028, allowing digital asset ledgers to access programmable settlement in sterling central bank money through Real-Time Gross Settlement (RTGS). It is also consulting on extending RTGS and Clearing House Automated Payment System (CHAPS) settlement hours, including moving towards near-24/7 settlement.

The PRA also reaffirmed its support for innovation in deposits and payments infrastructure, including tokenised deposits. It continues to expect retail stablecoin or e-money issuance by banking groups to occur through separate non-deposit-taking insolvency-remote entities with distinct branding from deposit products. However, the PRA signals a more proportionate approach for wholesale-only stablecoin use cases and notes that the DSS may provide an appropriate environment to explore these models.

The BoE will consider the eligibility of tokenised assets, including DIGIT, as collateral in its Sterling Monetary Framework operations. It will also set out policy considerations on how tokenised collateral assets already acceptable as regulatory collateral by central counterparties (CCPs) could become eligible under UK European Market Infrastructure Regulation (UK EMIR).

The authorities describe DIGIT as a key initiative and demonstration of the UK authorities’ commitment to enabling tokenisation in capital markets. The FCA and BoE see it as a practical demonstration of digital issuance, on-chain settlement and tokenised market infrastructure operating within the UK framework.

Reconsidering custody for specified investment cryptoassets

The FCA is not taking forward its proposal to apply Client Assets Sourcebook 17 (CASS 17) to specified investment cryptoasset (SIC) custody at this stage. Firms seeking to provide SIC custody will be assessed against applicable Client Assets Sourcebook 6 (CASS 6) requirements while the FCA considers whether a different safeguarding framework is needed.

This reflects concerns about applying a single approach across digitally native SICs, tokenised equivalents of traditional securities and mixed custody models. The FCA is seeking input on how safeguarding requirements should protect clients, support fungibility and interoperability, and maintain clear accountability as tokenised market structures develop.

What do firms need to do?

This paper is more significant than a standard call for input. The UK authorities are signalling how they expect tokenised wholesale markets to develop and which parts of the market structure they are prepared to support.

The areas most likely to scale first are those where current infrastructure is fragmented, reconciliation-heavy or operationally slow. Settlement, collateral management, fund operations, primary issuance and post-trade processes are likely to be the most credible near-term use cases. Tokenisation will need to demonstrate operational or commercial advantages, not simply replicate existing processes on new infrastructure.

Firms should also recognise that the authorities are not proposing a lower-standard market. The emphasis throughout the paper is on maintaining accountability, operational resilience, market integrity and clear records of ownership. Firms using tokenised infrastructure will still need to demonstrate how regulatory outcomes are achieved in practice, particularly where public networks, smart contracts or interoperable structures are involved.

The PRA’s interim position creates both opportunity and uncertainty. Prudential equivalence for tokenised traditional assets is an important signal for firms considering participation in DSS activity, tokenised collateral or DIGIT-related structures. But the absence of a final prudential framework until at least 2028 means firms will need to operate within evolving supervisory expectations for several years.

Next steps

Responses to the Call for Input are due by 3 July 2026. The FCA and BoE will hold industry workshops and publish a response statement over the summer and issue a full roadmap for digitalisation of wholesale markets later in 2026.